Shire PLC (ADR)(NASDAQ:SHPG) has sued Allergan Plc over accusations that it schemed to prevent doctors from giving its dry eye disease treatment as a prescription. Allergan was accused by Shire of antitrust law violation with a view to preserving the market share of Restasis, its drug for the treatment of dry eye disease, and preventing Xiidra, Shire’s treatment for the dry eye condition, from being prescribed.
“Quite simply, Allergan has and will continue to use bundled discounts, exclusive dealing, coercion and interference to unlawfully ‘block’ Shire from competing with it, and to maintain its monopoly in the Part D market at all costs,” said Shire.
Sovereign status
The suit comes after an announcement was made last month by Allergan to the effect that patents for Restasis had been transferred to upstate New York since legal challenges are limited by the state’s sovereign status. Last week four leaders in the U.S. Senate demanded an investigation into whether the move by Allergan was anti-competitive and made with the intention of keeping drug prices high.
According to regulatory filings, the largest drug in Allergan’s portfolio besides Botox was Restasis. Last year the dry eye drug generated sales worth $1.49 billion and so far this year sales worth $676.4 million have been generated. The sales of Shire’s Xiidra on the other hand reached $96 million in the first half of the year.
Tear production
A spokesperson for Allergan, Mark Marmur, claimed that the lawsuit lodged by Shire lacked merit since the company spares no effort in complying with Medicare procedures. Marmur added that as a result of competition in the market for chronic dry eye treatments, prices had been driven down.
The dry eye condition happens when there is improper or inconsistent production of tears. When left treated, scarring, inflammation or even vision loss can result. In the United States about 16 million adults are suffering from the condition. Allergan’s Restasis was approved by the U.S. Food and Drug Administration in 2002 while Shire’s Xiidra got the approval of the FDA last year.
On Monday shares of Shire Plc rose by 2.04% to close the day at $156.27.
